SWOT and Competitive Advantage Analysis SWOT and Competitive Advantage Analysis Swot is a method of formulating a business plan based on the strength, weaknesses, opportunity and threats faced by a given company. The following is an example of a table illustrating the strategic plan that is used in the implementation of a SWOT operational plan. A 5x5 table with four strategies listed across the top and the four SWOT variables along the side (Zimmerman, 2009). Strengths Weaknesses Opportunities Threats Low cost High profit margin Competition Economies of scale Changes in technology Differentiation High market share High cost Competitive advantage Innovations Focus Vision Competition Economies of scale Innovations Preemptive Informed decision Time wasting Competitive advantage Innovations Elements from analytical models contribute to each of the four SWOT variables (Dyckman, 2006). Strengths Weaknesses Opportunities Threats Low cost Automation Political Factors (Tax policy) Economic Growth Employment Laws Differentiation Service Inflation(Economic factors) Social Factors(emphasis on safety) Technology development Focus Firm Infrastructure Inflation(Economic factors) Technology development In Bound Logistics Preemptive Population Growth Rate Service Outbound Logistics Service Competitive Advantage The activity of attaining competitive advantage in business requires total utility of both resources and manpower.
The investor should choose the right technology while taking optimum use on cost advantage and product differentiation. This will enable the firm to attain maximum competitive advantage through deliverance of maximum utility to customers with the least possible cost. Weakness: political factors (tax policies) Tax waivers may reduce total annual costs increasing on profit margins. Through more money saved from tax waives, investment can be done on the product. In the long run this will guarantee customer loyalty. Good relations with the authorities create good will for the firm. Development of other investment opportunities due to reduced costs (Dyckman, 2006) Opportunities: economic growth Reduced cost facilitates better efficiency and total output, which is good for the economy. A differentiated product ensures a larger market share which, in turn, maximizes on economic growth. Well-set economic goals can easily be achieved as it gives direction to the development of the organization. It facilitates better achievement of goals and, in the end, leading to increased economic growth. Threats: employment laws pay employees well When employees are well remunerated and better motivated, the output will be increased because of an increased average productivity of labor. The firm is able to attain competitive advantage over other firms due to the well-established labor conditions, which guarantees better quality products. A good economic growth enables diversification; as a result, there is stability in business. It facilitates the company to avoid well-calculated risks and get and increase returns of investment (Gleick, 1999). Competitive Advantage In order for the company to be able to achieve a competitive advantage even in its SWOT implementation, it must be able to create a niche over the other companies in the following fields: 1.
Cost leadership 2. Differentiation 3. Niche focus 4. Preemptive move (or first-mover advantage) Cost Leadership Low cost leadership is the capacity of the company to be able to produce quality goods to its customers, while maintaining the cost of production of the commodities at the lowest cost possible. In this case, the company has to consider the best methods of technology available. This method has to have the highest possible efficiency in the production of commodities in terms of the cost of production and maintenance (Porter, 1985). Cost leadership involves much more than cost reduction.
Incost leadership the company has to ensure that the quality produced ismaintained in order to sustain the image of the company. The company must be able to transform the low cost supplies in to low prices of commodities. The better a company is able to own the largest market share of thefewer competitors it will have. This is only achievable if the company incorporates an efficient strategic plan in the operational level of the firm (Gleick, 1999). Company communication system must also be up to date. This must be audited from time to time to ensure quality of the firm.
This guarantees that the firm is able to improve on the feedback and the response to better services and maintenance. Quality planning must also be ensured through better budgeting policies and procedures. A good example, of a company that has been able to achieve this is the Wal-Martcompany. Through proper coordination by the management, the firm is able to deliver the lowest priced commodities in the market (Gleick, 1999). Differentiation To be able to achieve this, the firm may have to use a unique technology and if possible a copywriter kind of technology.
This aids the firm in having a monopoly. For example, the coca cola company uses monopoly power to keep the market using a monopoly power. In this case, the firm is able to lock out competition from new market entrants due to the enormous initial capital required by the firm to start up. The firm may also accomplish this by ensuring that, its products are of high quality over time. In doing this, the firm will be able to create goodwill in its brand of goods in the market (Fine, 2011). Niche Focus In the development of a stable market base, the firm may decide to focus its resources in a new unexploited market that has a good potential for growth.
This is normally done in a specific geographical location. A good example of a company that has established itself in this way is the Nokia handset company, which has a market in Africa. The firm has been able to exploit the market widely since the introduction of the mobile phone industry in the African market (Fine, 2011).
Preemptive Move (or First-mover Advantage) In this case, the first firm to introduce a given technology in the market is the one that has the opportunity to establish itself better. This is based in the assumption that the firm will start as a monopoly in the market before competitors enter the market. If the firm is able to put in place a good strategic plan and marketing strategy, it may be able to grow to a major monopoly (Williamson, 2004). Conclusion In good marketing plans, we must be able to balance on our use of economic, human and technological resources in order to achieve good levels of output.
This will ensure that the products produced are of satisfactory quality to consumer and that the cost incurred is the lowest we can spend as affirm. We must also look at other factors such as the specific needs of the consumer in order to be able to achieve our goal. This will also help us to attain brand loyalty from our customer (Williamson, 2004).
References Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York, NY. The Free Press. Fine, L. (2011). The SWOT analysis published. Oxford, OX: Elsevier Ltd. Williamson, D. (2004). Strategic management and business analysis. New York, NY: Penguin Publishers. Dyckman, T. (2006). SWOT analysis II: Looking inside for strengths and weaknesses. New York, NY: Harvard Business Press. Zimmerman, J. (2009). Managerial economics and organizational architecture (5th Ed. ). New York, NY: McGraw Hill/Irwin. Gleick, J. (1999). Investment in competitive advantage. New York, NY: Cambridge University Press.